Bank of America raises the target price of Silicon Motion Tech to $90, optimistic about TSMC's foundry and NVIDIA's collaboration empowerment
Bank of America upgraded Silicon Motion Tech's stock rating from "Neutral" to "Buy," raising the target price from $55 to $90, primarily benefiting from collaborations with TSMC and NVIDIA. Silicon Motion Tech's stock price rose by 4.5%, with analysts highlighting its strong revenue growth and gross margin performance, benefiting from the wave of AI investments and cost control advantages
According to the Zhitong Finance APP, Bank of America recently upgraded the stock rating of semiconductor design company Silicon Motion Technology (SIMO.US) from "neutral" to "buy," and raised its target price from $55 to $90, mainly due to the company's deep partnerships with major global NAND flash memory chip manufacturers and American tech giants like NVIDIA (NVDA.US). Driven by this positive news, Silicon Motion Technology's stock price rose 4.5% during Wednesday's early trading session.
This Hong Kong-based chip design company focuses on the research and development of NAND flash controllers required for solid-state storage devices, with its products manufactured by global wafer foundry leader TSMC (TSM.US). Bank of America analyst Simon Woo's team pointed out in their latest research report that Silicon Motion Technology has demonstrated strong revenue growth momentum and excellent gross margin performance, primarily due to the company's strong bargaining power in the supply chain and cost control advantages formed through TSMC's foundry procurement, which makes it relatively less affected by U.S. tariff policies.
The report particularly emphasizes that, similar to memory chip manufacturers, Silicon Motion Technology is benefiting from the global acceleration of sovereign artificial intelligence investment trends. The company's newly launched MonTitan series of enterprise-grade solid-state drive controllers and boot drive products have become key tools to capture the growing demand for data center construction. Based on the judgment of incremental opportunities driven by AI data centers, Bank of America significantly raised Silicon Motion Technology's target stock price from $55 to $90, corresponding to an expected price-to-book ratio of 3.8 times for 2025-2026, a significant increase from the previous valuation level of 2.4 times.
"The current valuation level is close to the upper limit of the company's historical valuation range of 2.0-4.0 times from 2015 to 2024," Simon Woo wrote in the report. This adjustment reflects the capital market's optimistic expectations for storage demand generated by the iteration of artificial intelligence technology. Notably, Seeking Alpha platform analyst Emmanuel Onwusah recently also suggested a "cautious buy" strategy for Silicon Motion Technology, believing that the company has enormous expansion potential in the enterprise storage and data center market, especially with the new MonTitan series of enterprise-grade solid-state drives and in the automotive electronics field, combined with its robust profitability and current valuation level, which possesses long-term allocation value
